A German MEP says Germany, France and the Netherlands will buy Greek bonds to help Athens deal with its debt. A senior German official has dismissed the claims.

A German member of the European Parliament announced Saturday that Germany, France and the Netherlands are planning to buy Greek bonds to help Athens cope with its debt crisis.

The claim, backed by a leading Greek newspaper, was made by MEP Jorgo Chatzimarkakis on Greek television, despite reports that a senior German official, who declined to be named, had dismissed the comments as "nonsense."

"Germany is planning to buy 5-7 billion euros ($6.8 - 9.5 billion) [of bonds] immediately," said Chatzimarkakis, a German of Greek heritage. He added that Germany's state-owned development bank KfW and France's state-owned Caisse des Depots would contribute. Earlier, big German banks Deutsche Postbank, Eurohypo and Hypo Real Estate said they would not be buying any more Greek government bonds.

Athens plans to issue its second round of bonds this year, possibly in early March, in order to make good on debt payments due in April and May. Greece needs about 20 million euros to prevent a default, which could have potentially catastrophic effects on other eurozone economies.

The Greek finance ministry and the European Commission declined to comment on the report, and there was no immediate comment from France's government.

Further tensions

On Friday, both Germany and Greece sought to downplay rising tensions as Athens said it would not seek World War II reparations from Germany.

Several government officials and opposition politicians have pressured Prime Minister George Papandreou to renew demands that Germany compensate Greece for Hitler's occupation of the country. Germany claims it has already paid Greece billions of euros in reparations.

German Foreign Ministry spokesman Stefan Bredohl said Berlin and Athens had had a "slight disagreement," but that the German ambassador and the Greek parliamentary speaker had recently had an "amicable" meeting.

The rehash of the decades-old war reparations dispute came as the German government announced a March 5 meeting in Berlin between Papandreou and German Chancellor Angela Merkel. Greece may soon be in need of a government bailout, in which Germany would likely play a central role, and which many Germans strongly oppose.

Speaking to parliament, Papandreou said his government could not wait to address the deficit, and that he was optimistic the European Union would lend its support.

"We are asking the EU for its solidarity and they are asking us to meet our obligations," he said. "We will meet our obligations... We will demand European community solidarity, and I believe we will get it."

A Focus cover sparked much controversyCalls for boycott

Parallel to the spat over war reparations, the Greek and German press have exchanged mocking words and images. The latest issue of German news magazine Focus featured an image of the Venus de Milo raising her middle finger on the cover. A Greek newspaper responded by printing an image of the statue atop the Victory Column in Berlin holding a swastika.

The Venus image led George Lakouritis, president of Greece's oldest consumer group INKA, to call on Chancellor Merkel to condemn the magazine. The group also distributed leaflets in central Athens and in front of the German-owned electronics store Media Markt calling for a boycott of German goods.

"The distortion of a statue of Greek history, beauty and civilization, from a time when there (in Germany) they were eating bananas on trees is impermissible and unforgivable," the group said.

Barack Obama was in his element as he addressed the bipartisan health-care summit he had convened for the principal purpose of shaming the recalcitrant Republicans.

His preferred lectern had been taken away and he had been forced to agree to remain seated but it was nevertheless a cherished opportunity for him to scold, patronise and peevishly disdain his opponents – and to pontificate for nearly six hours.

To be fair, Obama spoke for a mere 119 minutes, as opposed to the 110 minutes he deigned to allocate to the Republicans and the 114 minutes he gave to his fellow Democrats. When challenged about the two-to-one imbalance between the parties, Mr Obama shot back: "I'm the President."

Again and again, he put Republicans down with sarcastic asides, berating them like naughty schoolboys for bringing in a copy of the 2,400-page Senate health bill as a "prop" and informing them of the need to "get our facts straight".

The televised event, dreamt up by the White House to create the desired "atmospherics" for an attempt to push his health-care bill through Congress by Easter, underlined the reality that Obama is not a leader or even really a politician – he is a professor.

Professor Obama is convinced of his own intellectual superiority. When his pupils fail to realise that he knows what is good for them, he simply repeats himself in the expectation that the simpletons will eventually understand.

As the astute psephologist Michael Barone has pointed out, Obama can be understood in large part by reflecting on where he spent his adult life before arriving at the White House – Los Angeles, New York, Cambridge and Chicago.

For almost three decades, he lived in liberal campus communities where he was insulated from the real world by comfortable consensus and shared assumptions.

Now that Obama inhabits the self-reinforcing cocoon of the White House, this background has become a dangerous liability – and could spell disaster for Democrats in the November midterm elections.

Although Obama graced the health-care summit with his characteristic silky eloquence, the event was both a sham and a failure.

A sham because it wasn't a genuine stab at brokering a compromise between Democrats and Republicans but an attempt to portray Republicans as the block to "progress". A failure because Republicans defied expectations by presenting measured philosophical objections to the bill and outlining sensible alternative approaches.

Obama is becoming something of a victim of his own oratorical success.

The more he talks, the less people listen. We have heard so much from him that his words carry less and less weight. It is the law of diminishing returns.

And for all the reasonableness of what he had to say and the familiar high-minded calls to rise above politics, everyone knew that Obama had already decided to embark on the ironically-named process of "reconciliation" to force the health-care bill through.

Under reconciliation, bare majorities in both chambers can be used to secure passage of legislation – essentially the same legislation that even voters in liberal Massachusetts rejected in last month's special election for Ted Kennedy's Senate seat.This is a lose-lose route for Obama. First, it's highly questionable whether he can secure the majorities he needs. With 59 Democratic votes in the Senate and only 51 required, he could be on solid ground. But in the House of Representatives, where conservative Democrats fear a bloodbath in November, it is likely to be a very different story.

Second, if he does prevail on Congress to do his bidding, he'll essentially have resorted to using a legislative loophole to force through something that most Americans oppose – and this from the man who vowed to banish cynicism from the conduct of politics.He can't seem to grasp that voters don't want an expansion of government to cover health care. It's not a failure to understand the professor but a disagreement with the fundamentals of the lesson he's dictating.

The most amusing political intervention of last week was from former president Jimmy Carter, who indignantly rejected the increasingly common charge that Obama is "as bad as Carter".

On only one occasion since 1896 has a party lost the White House after just four years. That was when Carter was defeated by Ronald Reagan in 1980.

Startlingly, America's first black President and the man hailed a little over a year ago as the hope of a generation, is beginning to look like he could follow suit in 2012.

Saturday, February 27, 2010

Lockerbie bomber: family hopes Megrahi 'will beat cancer' after release from jailThe family of Abdelbaset Ali Mohmed al-Megrahi, the only man convicted of the Lockerbie bombing, hopes he will beat cancer six months after he was released from jail on compassionate grounds.

His elderly father, Ali, keeps a vigil at his son’s side at the family’s home in Tripoli as Megrahi, 57, battles a serious prostate cancer. The father hopes a “miracle” could happen.

Mr Megrahi Snr was quoted on Saturday as saying: “A close relative was diagnosed with a similar disease and he was treated and recovered completely. We hope that Adbelbaset recovers his health as well.

“I think that the sick are not just cured by medicine, but also having a high morale and a sense of freedom, and these were not available to Abdelbaset in prison.”

Mr Megrahi Snr said that his son was working on his autobiography and remains determined to prove that he had nothing to do with the Lockerbie bombing of 22 years ago.

The Sunday Telegraph revealed a week ago that Megrahi was living in a luxury villa six months after he was released from jail on compassionate grounds because he had less than three months to live.

He no longer receives hospital treatment after ending the course of chemotherapy that he had been given after returning to his homeland last August.

Professor Karol Sikora, the London-based doctor who examined Megrahi and predicted he would be dead by last October, admitted last weekend that the fact the bomber is still alive might be “difficult” for the families of the 270 victims of the attack.

Our disclosure incensed many of the relatives of those who died in the bomb blast in December 1988 when Pan Am Flight 103 exploded in mid air over Lockerbie, Scotland, killing 243 passengers, 16 crew and 11 people on the ground.

Most did not want Megrahi released and they suspected he would live longer than the predicted,

It was revealed last September that the Libyan government had paid for the medical evidence which it hoped would enable Megrahi, 57, to be released. The Libyans had encouraged doctors to say he had only three months to live.

The life expectancy of Megrahi was crucial because, under Scottish rules, prisoners can be freed on compassionate grounds only if they are considered to have this amount of time, or less, to live.

However, the Scottish Government says that the report from Professor Sikora and two other doctors on Megrahi’s health was not seen by Kenny MacAskill, the Scottish Justice Secretary, before he ruled last August that Megrahi should be freed.

Megrahi’s release came after Libyan leaders warned that lucrative oil and trade deals with Britain would be cancelled if the bomber died in jail.

Megrahi, is now living in a spacious two-storey villa with his wife and their five grown-up children in a prosperous suburb of Tripoli, the Libyan capital. Other family members, including his father, are regularly at his side.

Prof Sikora, who was paid a consultancy fee last July to examine Megrahi, told The Sunday Telegraph last weekend: “My information from Tripoli is that it’s not going to be long [before Megrahi dies].

“They stopped any active treatment in December and he has just been going downhill very slowly at home. He is on high doses of morphine [a painkiller] and it’s any day now.”

Prof Sikora said that he suspected that Megrahi was still alive because he had received a “psychological” boost from returning to his homeland and being reunited with his family.“It’s stimulated him to have a remarkable [short-term] recovery,” he said. “It’s difficult. The choice offered by the letter of the law was either three months to live, or nothing. You couldn’t have a sliding scale.”

President Michelle Bachelet confirmed 47 deaths and said more were possible. Telephone and power lines were down, making damage assessments difficult in the early morning darkness.

"Never in my life have I experienced a quake like this, it's like the end of the world," one man told local television from the city of Temuco, where the quake damaged buildings and forced staff to evacuate the regional hospital.

The U.S. Geological Survey said the earthquake struck 56 miles northeast of the city of Concepcion at a depth of 22 miles at 3:34 a.m. (1:34 a.m. ED).

Chilean television and radio stations said several buildings collapsed in the city of Curico and that there was damage to buildings in the historic center of the capital Santiago, about 200 miles north of the epicenter.

The capital's international airport was forced to close, a highway bridge collapsed and chunks of buildings fell into the street.

In the moments after the quake, people streamed onto the streets of the capital, hugging each other and crying.

There were blackouts in parts of Santiago and communications were still down in the area closest to the epicenter.

Bachelet urged people to stay calm. "With a quake of this size we undoubtedly can't rule out more deaths and probably injuries," she said.

An earthquake of magnitude 8 or over can cause "tremendous damage," the USGS says. The quake that devastated Haiti's capital Port-au-Prince on January 12 was rated magnitude 7.0.

TSUNAMI

The Pacific Tsunami Warning Center said the Chile quake generated a tsunami that may have been destructive along the coast near the epicenter "and could also be a threat to more distant coasts."

It issued a tsunami warning for Chile and Peru, and a tsunami watch for Ecuador, Colombia, Panama, Costa Rica and Antarctica. Chile's navy said officials had lifted the tsunami warning in southern Chile, local radio reported.

According to a 2002 census, Concepcion is one of the largest cities in Chile with a population of around 670,000.

Chile's main copper producing region and some of the world's largest copper mines are in the far north of the country near its border with Peru, but there are also copper deposits near Santiago.

Chile produces about 34 percent of world supply of copper, which is used in electronics, cars and refrigerators.

In 1960, Chile was hit by the world's biggest earthquake since records dating back to 1900.

The 9.5 magnitude quake devastated the south-central city of Valdivia, killing 1,655 people and sending a tsunami which battered Easter Island 2,300 miles off Chile's Pacific seaboard and continued as far as Hawaii, Japan and the Philippines.

Saturday's quake shook buildings as far away as Argentina's Andean provinces of Mendoza and San Juan. A series of strong aftershocks rocked Chile's coastal region from Valdivia in southern to Valparaiso, about 500 miles to the north.

The tsunami warning center said there was a possibility the U.S. state of Hawaii could be elevated to watch or warning status.

Friday, February 26, 2010

Tupac Shakur was shot four more times in a drive-by in Vegas that took him out at the age of 25. It was not the first time that he was shot.

I don't particularly like rap, but the first time I heard this song was in a movie called "Gang Related". I was curious.

Tupac lived large and died short. Here is how it ended:

On September 7, 1996, Shakur attended the Mike Tyson – Bruce Seldon boxing match at the MGM Grand in Las Vegas. After leaving the match, one of the associates of Suge Knight, co-founder and former CEO of Death Row Records spotted 21 year-old Orlando "Baby Lane" Anderson, a member of the Southside Crips, in the MGM Grand lobby and informed Shakur. Shakur then attacked Anderson.

Shakur's entourage, as well as Suge and his followers assisted in assaulting Anderson. The fight was captured on the hotel's video surveillance. It was paybacks for an incident of a few weeks earlier when Anderson and a group of Crips had robbed a member of Death Row's entourage (Shakur's tribe) in a Foot Locker store, precipitating Shakur's attack.

(You really can't make this stuff up.)

After the brawl, Shakur went with Suge to Death Row-owned Club 662 (now known as restaurant/club Seven). He rode in Suge's car as part of a larger convoy including many of Shakur's entourage.

While paused at a red light, Shakur rolled down his window and a photographer took his photograph. Shortly after, they were halted by Metro bicycle cops for playing the car stereo too loud and not having license plates.

The police were soon satisfied that they were legit and released them. Later while stopped at a red light, a vehicle occupied by two women pulled up on their right side. Shakur, who was standing up through the sunroof, exchanged words with the two women, and invited them to go to a Club.

Shortly after, a late-model Cadillac with an unknown number of occupants pulled up to the side of Shakur's car, rolled down one of the windows, and rapidly fired twelve or thirteen shots at Shakur. He was struck by four rounds, with bullets hitting him in the chest, the pelvis, and his right hand and thigh and right lung.

After arriving on the scene, police and paramedics took Suge and a fatally wounded Shakur to the University Medical Center.

On the afternoon of September 13, 1996, Shakur died of internal bleeding. Dead at 25.

I can relate to being a young and wild . I was lucky,survived and got away with it. I get to look at life through my rearview, not Tupac. Damn shame that.

James Corum is Dean of the Baltic Defence College in Estonia. He has taught at American and British staff colleges and is the author of seven books on military history and counter-insurgency. He is a Lieutenant Colonel in the US Army Reserve (rtd) and has 28 years' experience as an army officer.

The Bush administration got a lot of things wrong – but at least they usually had some idea of who America’s adversaries were and who America’s friends were. For example, Bush’s policy of maintaining the special relationship with Britain was a simple recognition of the close bonds of alliance, friendship and interests that the British and Americans have had since World War I.

In contrast, Obama and his Secretary of State Hillary Clinton are apparently clueless about some of the most basic aspects of foreign policy: supporting one’s friends and fencing in one’s adversaries. The declaration of neutrality on the issue of the sovereignty of the Falklands issued by the US State Department is clear proof of the uselessness of the Obama administration.

In the grand scheme of things it makes little sense for America to give moral support to the Kirchner government in Argentina. Kirchner is no friend of the US and Kirchner’s government is in deep domestic trouble for its gross mismanagement of the economy and its attempts to suppress the press criticism of the regime at home. One has to wonder what benefit America gets out of hurting Britain on this issue. Perhaps Obama thinks that the more Leftist Latin American regimes will somehow approve of the US. If that is the case, he is truly mistaken, as most Latin American nations dislike the Argentineans, and have little sympathy for the mess Argentina got into over the Falklands.

But this mess is just typical of the drift in US foreign policy – if one can say that it even HAS a coherent foreign policy these days. As I said, at the core of the problem is a simple inability to recognise and support our friends over adversaries. In his first year in office Obama made numerous apologies for America’s past to the Third World, he effusively greeted the Venezuelan dictator Hugo Chavez, he bowed low to the Saudi ruler, and called for a “reset” of relations with Russia – all the while implying that America was at fault for all these problems. At the same time he rudely undermined the security of America’s Eastern European allies by cancelling the ballistic missile defence with no notice and no prior discussion, he failed to push for a free trade agreement with Colombia – America’s strongest ally in South America – and he supported Chavez’s allies when they tried (luckily unsuccessfully) to unseat a democratic and pro-US government in Honduras.

A big part of the problem is a Secretary of State who is a lightweight as far as foreign policy is concerned. Obama brought Hillary Clinton into the cabinet for domestic policy considerations. He needed to put Mrs Clinton – and her husband – under tight control. As a powerful senator from New York, she would probably have taken over as the de facto leader of the Democratic Party and been able to challenge Obama’s “Chicago Gang” for control of the party.

Despite the acclaim that America’s mainstream media has heaped on Hillary Clinton over the years, her foreign policy background and experience before becoming Secretary of State was to accompany her husband on foreign trips and preside over “first wives” dinners for the spouses of visiting heads of state. One learns a lot about protocol and ceremonies – but this is no preparation for the real work of making policy. Clinton has no experience or education in foreign policy. She speaks no foreign languages and has never lived abroad. She lacks the intellectual temperament to be a foreign policy leader. Like Obama, she has long surrounded herself with sycophants.

On assuming office, Obama’s vision of foreign policy was simple: he would repudiate past American policies and the whole world would melt before the president’s charm. The administration somehow thought that we really didn’t have enemies with agendas completely hostile to our own – there were just countries that had become offended by US actions and they would happily cooperate with America as soon as the evil Republicans were gone. Well, it hasn’t worked – and there was no Plan B.With a president overwhelmed by domestic problems, Hillary Clinton has failed to step in and set a foreign policy vision. Simply put, she does not have the brains or the experience to develop a coherent foreign policy vision for America. This is how we get policy mistakes on issues such as the sovereignty of the Falklands.

WASHINGTON, Feb 25 (Reuters) - U.S. regulators are looking into how Wall Street firms like Goldman Sachs (GS.N) helped debt-stricken Greece arrange derivatives deals that critics say were used to disguise the size of its budget deficits.

Federal Reserve Chairman Ben Bernanke made the disclosure on Thursday and suggested securities regulators also wanted the information.

"We are looking into a number of questions related to Goldman Sachs and other companies in their derivatives arrangements with Greece," Bernanke said in response to a question from U.S. Senate banking Committee Chairman Sen. Christopher Dodd before testifying to the group for a second day on the state of the U.S. economy.

Bernanke said the Securities and Exchange Commission similarly was "interested" in Wall Street's activities in helping Greece do derivatives deals.

He stopped short of saying an official inquiry of Goldman Sachs' activities was under way by either the Fed or SEC. The SEC had no immediate comment when contacted.

"Obviously, using these instruments in a way that potentially destabilizes a company or a country is counterproductive," Bernanke said. "We'll certainly be evaluating what we learn from the activities of the holding companies that we supervise here in the U.S."

In the midst of the severe financial crisis that swept the U.S. economy from 2007 to 2009, Goldman and other Wall Street firms converted to bank holding companies, putting supervision of them more firmly in the Fed's hands.

Goldman Sachs has come under scrutiny for deals it did with Greece before it staggered into a debt crisis that has raised fears of a sovereign debt default and forced the European Union to say it will help if necessary to avert one.

The Greek crisis has pressured the euro and EU partners fear it may spread to weaker euro zone economies like Portugal and Spain.

Goldman Sachs entered into currency swaps with Greece, which critics say helped it disguise its debt, and has defended them as neither uncommon at the time nor inappropriate.

Cross-currency derivatives that Goldman Sachs conducted for Greece in 2001 helped reduce the size of its debt at a time when the country was keen to meet criteria for entering the EU and adopting the euro.

Goldman Sachs has a particularly high profile in Washington, having produced numerous alumni including former Treasury Secretary Henry Paulson, many of whom still play active roles in key agencies like Treasury.

It also has attracted a heavy share of public anger over gold-plated banker pay packages, not helped by comments such as chief executive Lloyd Blankfein's assertion last November that the bank was doing "God's work."

The bulk of Bernanke's testimony was a repeat of remarks he made on Wednesday when he told the U.S. House of Representatives that a weak U.S. job market means interest rates must stay low for a long time to try to spur activity.

A key uncertainty is whether the economy can grow fast enough in future to bring unemployment down at an acceptable rate, Bernanke said, a particularly poignant remark in view of a Labor Department report on Thursday that showed unemployment insurance benefit claims rising for a second straight week.

FINANCIAL SERVICES TOO BIG

With the Senate working toward a bill on financial regulatory reform, expected to be unveiled by Dodd early next week, Bernanke said in response to questions that he hoped it would lead to a downsizing in the importance of the financial services sector, which he said has become too big.

He appeared to pour cold water on the idea of a "Volcker rule" that would ban banks from engaging in so-called proprietary trading -- using government-guaranteed capital to make bets for their own account -- as the Obama administration had advocated but Congress seemed to be moving away from.

"We all agree that we don't want excessive risk-taking, particularly not on a 'tails I win, heads you lose basis,' certainly, "Bernanke said, but added there could be "unintended consequences" from such a rule.

He has said that banking regulators should get more powers to monitor and stop some bank trading activities if they deem it necessary to protect financial stability.

One key theme that Bernanke turned to repeatedly during a question-and-answer session was the need for lawmakers to come to agreement on measures for shrinking soaring U.S. budget deficits.

Republicans are reluctant to raise taxes and Democrats have measures before Congress, including healthcare reform, that would at least initially raise deficits, leaving the two sides stalemated on a wide range of fiscal issues and making progress on deficit reduction next to impossible.

"It could become a problem tomorrow if bond markets are not persuaded that Congress is serious about bringing down the deficit over time," Bernanke warned. Big deficits can erode confidence in a country's ability to repay debt, in turn driving the value of currency down and push inflation up.

Thursday, February 25, 2010

At the very end of this clip the announcer mentions that Chinese Yuan lending doubled in one year. Let me tell you something sports fans, no bank anywhere at anytime can double lending year over year without some very serious consequences, let alone the entire lending system.

Assume for a minute that a bank is efficiently staffed in its lending department or for that matter its mail room. Double the work load and what do you think happens? You go out and hire more people, but what happens when the entire banking system doubles its workload? You cannot find people both experienced and available.

While that is happening everyone in the country learns that banks are shovelling money out the door. That sets off a borrowing panic. People do not want to miss the party and every crazy idea possible gets word processed and the spreadsheet dutifully reports the expected numbers.

Chen Jun, in preparation for his wedding, applied for bank loans to buy an apartment in downtown Nanjing, capital of Jiangsu Province. As a first-time home buyer, he thought he was entitled to a 30 percent discount on the loan's interest rate. He was surprised when all the banks knocked him back.

The practice of giving first-time home buyers a 30 percent discount on interests rate is fast disappearing as banks tighten lending to guard against bad loans. Most first-time home buyers can only get a 15 percent discount now.

Experts reckon the debate on how to prevent wide-spread default on loans will be one of the hottest at China's top legislative session to be held next week.

Concerns about bad loans have arisen after Chinese banks lent massive amounts that ended up in the property market, said Guo Tianyong, director of the China Banking Industry Research center with the Central University of Finance and Economics.

Lending to local governments' financing units is a concern, too, Guo added.

Some 2 trillion yuan, or 20.9 percent of China's new lending in 2009, found its way into the real estate sector, according to the People's Bank of China (PBoC), China's central bank.

A Bank of Communications report said local governments received financing from several banks through numerous financing units, making debt management chaotic as banks had difficulty tracking overall debt.

Chinese local governments cannot issue bonds, except through a limited pilot program launched in 2009. But they have set up more than 3,000 commercial units, and they borrow heavily through them.

About 3,800 financing units set up by local governments oversee assets of 8 trillion yuan. The local governments' liabilities total 5 trillion yuan and have a 60 percent liability rate, according to the PBoC.

Bad loan alarm bells having been ringing ever since China introduced its moderately loose monetary policy to fight the effects of the global financial crisis.

Chinese banks lent a record 9.59 trillion yuan in 2009 to help the economic recovery, which was almost double the amount loaned in the previous year.

The 2010 government loan target is 7.5 trillion yuan. But in January alone, banks extended 1.39 trillion yuan in new loans -- 18.53 percent of the full-year target.

"The record lending helped Chinese economy recover. But it also brought risks. Credit to unfavored sectors may tighten and lead to unfinished projects or bad loans in the end," said Lu Zhengwei, chief economist at Fujian-based Industrial Bank.

"When China unleashed that huge amount of credit, much of it found its way into the stock and property markets, inflating assets bubbles, inflation risks and bad loans," said sources who declined to be named at a state-owned commercial lender.

Experts believe bad loans can be checked through the control of lending growth and monitoring of capital sufficiency, the provision coverage ratio and the deposit-loan ratio.

Ba Shusong, a researcher with the Development Research Center under the State Council, said governmental and institutional controls might help reduce local governments' fund raising.

China's banking regulator, China Banking Regulatory Commission (CBRC), issued two directives on working capital loans and personal capital loans on Feb. 21, asking banks to manage risks more carefully and to verify that loans are used for their intended purposes.

The CBRC rules forbid the use of working capital loans to make fixed-asset investments or to buy equity stakes.

They also outlaw unreasonable loan quotas and scrambling to extend loans.

China has raised banks deposit reserve ratios twice in 2010.

Several months ago the CBRC required large banks to raise their minimum capital sufficiency rate from eight percent to 11 percent. Small and medium-sized banks had theirs raised to 10 percent.

At the same time, banks' provision coverage ratio was raised to 150 percent from 130 percent.

The lending structure should be adjusted to divert more credit to advanced manufacturing sectors, the modern service sectors, and small- and medium-sized enterprises, said Yan Qingmin, director of Shanghai Banking Regulatory Bureau.

He added credit should be drained from high-risk sectors, especially those that are highly energy intensive or polluting. Moreover, sectors suffering production overcapacity should also see tightened credit.

China's banking sector suffered in the 1990s for having lent heavily to local governments and state-owned enterprises. The lending spree resulted in 2 to 3 trillion yuan in bad loans.

The government issued 270 billion yuan of special bonds to deal with it. Four asset management companies were set up to takeover the 1.4 trillion yuan of bad loans incurred by the major lenders.

"The supervisors obviously are not willing to see the progress of China's banking sector in the past decade be obliterated by bad loans," said Guo, adding that he hoped the government's work report this year will mention specific measures to deal with the issue.

Tuesday, February 23, 2010

Looking for a story about government malfeasance, greed, lack of banking control and the shafting of the American taxpayer, meet Howard Milstein, billionaire and TARP recipient:

Bank deposits are really loans from the public to a bank.

Assets are the loans that the bank makes to the public.

From the late 2006-2007 and through today, Emigrant Bank has raised billions of dollars on the Internet, all of it insured by you know who, the FDIC, through a program called Emigrant Direct Through this program Emigrant bank borrowed billions of dollars from the American public.

Emigrant is a private bank owned by a billionaire family of real estate speculators.

With all those billions Emigrant still found it necessary to take $269 million from the TARP even though it's owners have an estimated wealth in excess of $3 billion. To date Emigrant has not repaid them yet the FDIC is still allowing Emigrant to take in more and more deposits. All of these deposits are FDIC insured.

Emigrant took the money and used it in its various subsidiaries including Emigrant Realty Finance, LLC and amongst other things speculated on California commercial real estate through its different affiliates. Emigrant made risky commercial loans and continuous legal loan sharking. Several mortgage brokers openly refer to Emigrant Bank as a predatory lender. Scroll down through this thread. Emigrant pays depositors 1.1%, then loans it out at 9% on mortgages to consumers with weak credit. According to the referenced thread, the loans typically have a default rate of 18%.

With that how could Emigrant be losing money?

Most banks, when they have troubled loans, do there best to sell the bad assets and convert them to cash. Banks enjoy tremendous leverage in their operations, as high as 20:1. That means $1 million in cash capital can support up to $20 million in loans. Great when the $20 million is generating 9% or 18% interest.

But what happens when the loans go bad?

A million dollar bad loan means the bank needs to reduce its lending by its leverage. 20:1 leverage means reducing loans by $20 million, increasing reserves or injecting new capital. That is standard enforcement procedure practiced by bank examiners. That is not what is being done by Emigrant Bank.

Emigrant Bank, owned by real estate speculators, believes that their foreclosed properties will go up in value.

How do we know that? Howard Milstein is also part owner of the New York Times and wrote an oped piece in the New York Times on his philosophy of what the government should do about mortgages and banks.

Emigrant transfers bad assets to an affiliated company called RETAINED REALTY INC, 5 E 42ND ST, NEW YORK, New York , the same address as Emigrant BankThey can get away with this because the FDIC is not doing their job. The FDIC and TARP enables Emigrant to risk tax payer money on real estate speculation and running a very bad bank.

The financial statements of Emigrant Bank scream for it to be taken over. Emigrant has taken $269 million in government funds. Why was Emigrant given this money? Bad loans of course, mostly residential and gobs and gobs of commercial real estate.

What is Emigrant Bank doing to improve its financial situation and bad loans?

How many mortgages do you think have been modified by Emigrant?

None, not one.

Emigrant has an affiliated company called Retained Realty that takes over the foreclosed properties and uses TARP money and FDIC insured deposits so that a related company can inventory distressed real estate, betting on the future value. If real estate value goes up, Emigrant and the Milsteins win. If it goes down the US taxpayers lose.

Where is the FDIC? MIA.____________________

Largest privately held bank in the U.S. still hasn't paid back Uncle Sam's TARP loan

Every major financial institution in New York has settled its debt with the Treasury -- except Emigrant Savings Bank.

A year after taxpayers bailed out the nation's financial system, every major bank in New York has settled its debt with Uncle Sam except one: Emigrant Savings Bank.The 160-year-old institution, the nation's largest bank in private hands, has yet to repay its $267 million in rescue money. The unprofitable bank is so riddled with dud loans and poor investments, it might need another infusion of bailout cash unless the Milsteins, the real estate family that has owned the bank since 1986, inject millions more into the enterprise.

Data filed with the Federal Reserve Board by Emigrant's parent, New York Private Bank & Trust Corp., spell out the difficulties at the institution, which has $16 billion in assets. Delinquent loans and other nonperforming assets tripled, to $1 billion, over the 12 months that ended last Sept. 30. As a percentage of loans, they are three times higher than at comparable banks. Despite the elevated number of troubled loans, the bank's loan-loss reserves and capital levels are substantially lower than peers'. Emigrant posted a $229 million net loss through the first nine months of 2009; early last year, the bank told Crain's its distressed loans would not result in losses unless real estate values declined another 40%.

Perhaps most alarming, the bank flunks a crucial measure of financial health: Its capital is exceeded by its nonperforming assets and loan-loss reserves. This measurement is known as the “Texas ratio,” and a reading above 100% indicates that a bank is in danger of failing. IndyMac Bancorp, for example, had a Texas ratio of 140% before it collapsed in 2008. The Texas ratio at Emigrant's parent is 113%.

Mr. Cassidy finds it startling that Emigrant is in such a situation. The bank has more than $11 billion in customer deposits at 34 branches in the city and suburbs and through an online operation. The Milsteins built their fortune—estimated by Forbes to be $3.8 billion—on savvy real estate investing, and Chief Executive Howard Milstein has in years past deftly steered the bank clear of the mortgage problems that sank rivals.

“Emigrant has never shown a Texas ratio anything close to what it is today,” Mr. Cassidy says.

Mr. Milstein was traveling and unavailable for comment, according to a spokesman. In response to e-mailed questions, the spokesman writes that operating results remain “strong,” and he attributes the bank's reported losses to accounting rules.

“Many of the accounting losses on Emigrant's financial statements are not the result of actual losses but are required to be reflected,” he emphasizes. “Emigrant expects that asset values for a significant portion of these assets will improve.”

The bank, the spokesman adds, has “very substantial reserves for potential actual loan losses and believes they far exceed what will actually be experienced.”

Like many big banks, Emigrant has been tripped up by souring residential mortgages, bad business loans and subpar private equity investments. But Emigrant, with roots as a savings and loan writing home mortgages, seems to have made the classic mistake of joining the party just as the punchbowl was running dry.

The institution's commercial and industrial loan portfolio jumped by 60% in 2007, to nearly $1 billion. Mr. Cassidy wonders if Emigrant started buying more loans originated by other banks. Whatever the case, the recession soon hit, and the bank now isn't collecting interest payments on fully one-third of C&I loans.

Emigrant seems to have upped its bet on the Milstein family favorite—real estate—at the wrong time. Fully 60% of its investment portfolio is in mortgage-backed securities, triple the level in 2006. It isn't clear if these securities contain government-guaranteed mortgages, but analysts say even if they do, they've probably lost value.

Its $150 million private equity arm, Emigrant Capital Corp., is also suffering from unfortunate timing, with four investments in 2006 as the M&A whirl hit overdrive. Two companies, representing 20% of the division's investment portfolio, filed for bankruptcy last year: Forward Foods, the maker of Detour protein bars, and Jolt Cola, the super-caffeinated soft drink. Jolt's founder has since sued Emigrant for allegedly driving his company into the ground and seeks $31 million in damages. Emigrant wouldn't comment.

All of this has left Emigrant with a thin capital base, even with the bailout millions. Using a strict definition of capital that analysts often turn to in hard times, Emigrant's tangible capital ratio is only 2.6%, compared with 5.5% for its peers. (Emigrant prefers to cite another form of capital, known as Tier 1; under this definition, the spokesman says, the bank's capital ratio is more than 12.5%, about twice the regulatory requirement.)

“They need as much capital as they can get their hands on,” says Fitch Ratings analyst Eric Newell, who last summer cut the bank's credit ratings from investment grade to junk. His outlook is “negative.”

As the bank's fortunes have declined, the Milsteins have stepped in to shore up its coffers. In 2008, they injected $110 million into Emigrant, and in 2007 they put in $60 million, according to Fitch.

Might family members dig into their pockets again to help their bank? Mr. Newell says Fitch can't count on such a scenario.

“Our ratings don't take their support into account,” he explains, “because we don't have the ability to assess their desire to provide it in the future.”

[This story first appeared in Crain's New York Business, a sister publication of InvestmentNews.]

Monday, February 22, 2010

US billionaire George Soros has more than doubled his investment in gold, despite calling it the "ultimate bubble" just weeks ago.

Mr Soros' investment vehicle Soros Fund Management increased its holding in SPDR Gold Trust to 6.2 million shares, worth $663m (£425m) at the end of 2009.

It had held 2.5 million shares at the end of the third quarter of 2009.

The gold price hit a record high of $1,226.56 an ounce in December, but has since fallen back to about $1,100.Mr Soros himself has suggested that gold may not be a good investment.

At the World Economic Forum in Davos last month, he said: "The ultimate asset bubble is gold." However, he did not say whether he was investing in the precious metal.

But he also said that when he sees a bubble, "I rush out and buy".

Mark Heyhoe, senior mining analyst at Westhouse Securities, said: "He has previously said that gold is the ultimate hedge against inflation - if you think inflation's going to rise, then I'm not surprised he bought into gold.

"A lot of people were starting to look at gold, and a lot of people follow what he does," he added. "But you need to buy a lot of gold to shift the price."

As well as raising its stake in SPDR, Soros Fund Management also increased its holding in Canadian gold producer Yamana Gold.

The company also bought more shares in seed producer Monsanto, Brazilian oil producer Petrobras, and Wall Street bank Citigroup.

Saturday, February 20, 2010

WASHINGTON -- Former Secretary of State Alexander Haig, a four-star general who served as a top adviser to three presidents and had presidential ambitions of his own, died Saturday of complications from an infection, his family said. He was 85.

Haig's long and decorated military career launched the Washington career for which he is better known, including top posts in the Nixon, Ford and Reagan administrations. He never lived down his televised response to the 1981 assassination attempt on President Ronald Reagan.

Hours after the shooting, then Secretary of State Haig went before the cameras intending, he said later, to reassure Americans that the White House was functioning.

"As of now, I am in control here in the White House, pending the return of the vice president," Haig said.

Some saw the comment as an inappropriate power grab in the absence of Vice President Bush, who was flying back to Washington from Texas.

Haig died at Johns Hopkins Hospital in Baltimore, where he was surrounded by his family, according to two of his children, Alexander and Barbara. A hospital spokesman, Gary Stephenson, said Haig died at about 1:30 a.m.

Alexander Haig, American Patriot, Warrior, Statesman, Diplomat, RIP

In his book, "Caveat," Haig later wrote that he had been "guilty of a poor choice of words and optimistic if I had imagined I would be forgiven the imprecision out of respect for the tragedy of the occasion."

Haig ran unsuccessfully for president in 1988.

"I think of him as a patriot's patriot," said George P. Shultz, who succeeded Haig as the country's top diplomat in 1982.

"No matter how you sliced him it came out red, white and blue. He was always willing to serve."

Born Dec. 2, 1924, in the Philadelphia suburb of Bala Cynwyd, Alexander Meigs Haig spent his boyhood days dreaming about a career in the military. With the help of an uncle who had congressional contacts, he secured an appointment to the U.S. Military Academy at West Point in 1943.

After seeing combat in Korea and Vietnam, Haig - an Army colonel at the time - was tapped by Henry Kissinger to be his military adviser on the National Security Council under Nixon. Haig "soon became indispensable," Kissinger later said of his protege.

Nixon promoted Haig in 1972 from a two-star general to a four-star rank, passing over 240 high-ranking officers with greater seniority.

The next year, as the Watergate scandal deepened, Nixon turned to Haig and appointed him to succeed H.R. Haldeman as White House chief of staff. He helped the president prepare his impeachment defense - and as Nixon was preoccupied with Watergate, Haig handled many of the day-to-day decisions normally made by the chief executive.

On Nixon's behalf, Haig also helped arrange the wiretaps of government officials and reporters, as the president tried to plug the sources of news leaks.

About a year after assuming his new post as Nixon's right-hand man, Haig was said to have played a key role in persuading the president to resign. He also suggested to Gerald Ford that he pardon his predecessor for any crimes committed while in office - a pardon that is widely believed to have cost Ford the presidency in 1976.

Years after serving as one of Nixon's closest aides, Haig would be dogged by speculation that he was "Deep Throat" - the shadowy source who helped Washington Post reporters Bob Woodward and Carl Bernstein break the Watergate story. Haig denied it, repeatedly, and the FBI's Mark Felt was eventually revealed as the secret source.

Following Nixon's resignation, Haig stayed with the new Ford administration for about six weeks, but then returned to the military as commander in chief of U.S. forces in Europe and supreme allied commander of NATO forces - a post he held for more than four years. He quit during the Carter administration over the handling of the Iran hostage crisis.

Haig briefly explored a run for presidency in 1979, but decided he didn't have enough support and instead took a job as president of United Technologies - his first job in the private sector since high school.

When Ronald Reagan became the 40th president of the United States, Haig returned to public service as Reagan's secretary of state, and declared himself the "vicar of American foreign policy."

His 17-month tenure was marked by turf wars with other top administration officials - including Defense Secretary Caspar Weinberger and national security adviser William Clark.

Two months into the new administration, Haig was portrayed as pounding a table in frustration when the chairmanship of a crisis management team went to Bush. Despite the clashes, Haig received high praise from professional diplomats for trying to achieve a stable relationship with the Soviet Union.

In his book, Haig said he had concluded during a 1982 trip to Europe with the president that the "effort to write my character out of the script was under way with a vengeance." He resigned days later.

Describing himself as a "dark horse," Haig sought the Republican presidential nomination for the 1988 elections. On the campaign trail, he told supporters about his desire to "keep the Reagan revolution alive," but he also railed against the administration's bulging federal deficit - calling it an embarrassment to the GOP.

Haig dropped out of the race just days before the New Hampshire primary.

During his career in public service, Haig became known for some of his more colorful or long-winded language. When asked by a judge to explain an 18 1/2-minute gap in one of the Nixon tapes, Haig responded: "Perhaps some sinister force had come in."

And later, when he criticized Reagan's "fiscal flabbiness," Haig asserted that the "ideological religiosity" of the administration's economic policies were to blame for doubling the national debt to $2 trillion in 1987.

Haig is survived by his wife of 60 years, Patricia; his children Alexander, Brian and Barbara; eight grandchildren; and his brother, the Rev. Francis R. Haig.

The video takes almost 30 minutes to watch. The quality is amazing. The Mossad operation was recorded and detailed by Dubai State Security. A time line and identification was made of the events that lead to and followed the killing of the military commander of Hamas, Mahmoud al-Mabhouh.

The Mossad operation is brilliantly coordinated and flawlessly executed, except that it was recorded and available for analysis. There are clear videos, photos and analysis of the not so secret agents. That is not considered a good thing in most clandestine operations.

Claims that Mossad knew they were being recorded is laughable and absurd. You can look at this remarkable video and decide for yourself.

I am certain Mossad has watched this hundreds of times and realizes that in the future, Dubai may not be the best place to make a hit and still protect your agents.

I have no ethical problem with a controlled state sponsored killing of an enemy, but the wisdom and ethics of using passports from unwary and uninvolved civilians is astonishing to me.

There can be no possible up side to such a foolish decision. However, I wait in eager anticipation for any explanation or theory that has so far eluded me.

KARACHI, PAKISTAN -- The capture of senior Afghan Taliban leaders in Pakistan represents the culmination of months of pressure by the Obama administration on Pakistan's powerful security forces to side with the United States as its troops wage war in Afghanistan, according to U.S. and Pakistani officials.

A new level of cooperation includes Pakistani permission late last month for U.S. intelligence officials to station personnel and technology in this pulsating megacity, officials said. Intercepted real-time communications handed over to Pakistani intelligence officials have led to the arrests in recent days of Mullah Abdul Ghani Baradar, the Afghan Taliban's No. 2 commander, and two of the group's "shadow" governors for northern Afghanistan.

The detentions, which have taken place in a wave since early last week, were initially kept secret to allow intelligence operatives to use information gleaned from captures to draw additional militants into exposing their locations and movements, according to officials who discussed the ongoing operations on the condition of anonymity. Final agreement on the Karachi operation came during the last week of January, with the intercept system up and running by the first week of February.

"The ISI and the CIA are working together, with the Americans providing actionable intelligence and the Pakistanis acting together with them" to track down the insurgent leaders, a Pakistani official said, referring to Pakistan's Inter-Services Intelligence directorate.

The arrests offer stark evidence of something that has long been suspected: Top Afghan Taliban leaders have found refuge across Pakistan, particularly in its cities -- a fact the government here has long denied.

Pakistan's decision to go after the Afghan Taliban leadership reflects a quiet shift underway since last fall, said officials from both countries, who cited a November letter from President Obama to Pakistani President Asif Ali Zardari as a turning point.

The letter, which was hand-delivered by U.S. national security adviser James L. Jones, offered additional military and economic assistance and help easing tensions with India, a bitter enemy of Pakistan. With U.S. facilitation, the Indian and Pakistani foreign ministers have agreed to meet next week, the first high-level talks between the two countries since terrorist attacks in Mumbai in late 2008.

The letter also included an unusually blunt warning that Pakistan's use of insurgent groups to pursue its policy goals would no longer be tolerated. The letter's delivery followed the completion of a White House strategy review in which the administration concluded that stepped-up efforts in Afghanistan would not succeed without improved cooperation from Pakistan.

In explaining Pakistan's shift, sources also cited regular visits to Pakistan by U.S. officials, a boost in intelligence-sharing and assurances by Washington that a military push in southern Afghanistan would not spill into Pakistan. The United States also promised Pakistani officials that it has no intention of abandoning the region once that offensive ends.

Pakistan's agreement last month to allow expanded CIA interception operations follows a long period of estrangement between the U.S. intelligence agency and the ISI.

The CIA has long maintained that the ISI retained close ties with the Afghan Taliban as a way to hedge its bets against Indian influence in Afghanistan and the likelihood of an eventual U.S. departure.

Pakistan has detained prominent militants in the past, only to release them later. It was unclear Thursday to what extent the detained Taliban leaders were cooperating with their captors and whether the three may provide information that helps authorities apprehend others.

Baradar, whom the Pakistanis seized in Karachi with CIA help, was operational commander of the Taliban leadership council that American officials say plans its attacks from the western Pakistani city of Quetta but whose existence Pakistani officials declined to acknowledge. Mullah Abdul Salam, the Taliban leader in Afghanistan's Kunduz province, and Mullah Mohammad, the shadow governor in Baghlan province, were taken into custody in Pakistan about 10 days ago, according to the governor of Kunduz, Mohammad Omar, and a Pakistani security official. The two served as part of the vast network of Taliban leaders who coordinate the Afghan insurgency and oversee Taliban courts, which mete out swift and often brutal settlements for local disputes.

There were differing accounts about where the two shadow governors were arrested. Omar said they were detained in Quetta, but the Pakistani official said they were arrested near the northwestern city of Peshawar. Analysts said the arrests show that Taliban leaders regularly travel between cities such as Quetta and Karachi, a transit hub where they could easily melt into the population of about 16 million.

"Pakistan was looking the other way, for the simple reason that they didn't want to alienate the Taliban," said Javed Hussain, a retired Pakistani army brigadier.

This month's arrests represent "major progress," a U.S. intelligence official said. "No one has forgotten Pakistan's complex history with the Taliban. But they understand how important this is to the United States, the region, and to their own security."

The U.S. intelligence buildup in Karachi re-creates a level of cooperation that existed until 2004 and resulted in the arrests of senior al-Qaeda figures in Pakistan, before relations began to sour between George W. Bush's administration and the then-government of Gen. Pervez Musharraf.

Jones, the national security adviser, visited Islamabad again last week. Significantly, he held a joint meeting with Pakistan's military and civilian leaders, who have often worked at cross purposes on both domestic and foreign policy.

Subtle signs of a shift among Pakistani officials have occurred in recent months, as the Taliban's Pakistani offshoot has unleashed a sustained campaign of suicide bombings. Pakistan's army chief, Ashfaq Kiyani, recently offered to train Afghan forces, an overture that some analysts read as a message to the Afghan Taliban that Pakistan had other options for exerting influence in Afghanistan. Some Pakistani security officials had grown concerned that the Afghan Taliban might be aiding the Pakistani franchise, said Hasan-Askari Rizvi, a professor and defense analyst.

"It helps Pakistan from a purely Pakistan perspective," he said of the Taliban arrests, "in the sense that they have also communicated a very clear message, even to the Afghan Taliban, that Pakistan can play tough with them."

Observers in Pakistan say the shift will facilitate the nation's desire to drive any political negotiations between the Taliban and the Afghan government, which it views as an opportunity that could end the war and place a friendly regime next door. Baradar and the shadow governors could be valuable bargaining chips, or they could have been surrendered by the Taliban to give Pakistan entry into the talks, according to competing theories in Pakistan.

"It is definitely part of a strategy -- one that will eventually lead to negotiations and talks and the introduction of the Taliban into the mainstream of Afghan politics in a government which has been agreed upon by Pakistan," said Hussain, the retired brigadier.

Pakistani Foreign Minister Shah Mahmood Qureshi insisted Thursday that fear of "Talibanization" in Pakistan, not U.S. pressure, drove the arrests. That concern was underscored by a bombing that killed nearly 30 people in Khyber Agency, near the Afghan border.

A Pakistani intelligence official said the arrests were the result of what the nation had long been demanding from the Americans: concrete information about Taliban leaders' whereabouts.

"We are dependent on technical intelligence being provided by the U.S. . . . That is exactly what happened here," the ISI official said of the Baradar capture. "What is our strategic interest? Our strategic interest is that this guy is a menace, a threat, and we always thought he was in Afghanistan. When we found him in Pakistan, we arrested him. That demonstrates our sincerity."

DeYoung reported from Washington. Correspondent Joshua Partlow in Kabul and special correspondents Shaiq Hussain in Islamabad and Haq Nawaz Khan in Peshawar contributed to this report.______________________________________

Red tape delayed a variety of federal stimulus projects including transportation-security upgrades, home weatherization and housing-project surveillance cameras, according to a government report.

Agencies responsible for administering stimulus dollars told the Government Accountability Office that complying with aspects regulating the use of the funds—such as requiring contractors to pay local prevailing wages, strict "Buy American" rules for materials, and a mandate that federal agencies must consider a project's effect on any historic site—were preventing them from moving more quickly to put stimulus money to work.

The report by the nonpartisan GAO was requested by Senate Minority Leader Mitch McConnell (R., Ky.) and could provide more ammunition for the partisan fight over the effectiveness of the stimulus stirred up by the program's one-year anniversary this week. Obama administration officials say the stimulus program has succeeded in averting a deeper recession. Republicans say the program has been ineffective, costly and slow.

A spokesman for the White House Office of Management and Budget said that when Congress assembled the stimulus package it "wanted to ensure that all possible Recovery Act opportunities are available for American workers and American companies."

The stimulus bill required for the first time that recipients of grants from the Energy Department's weatherization program comply with Davis-Bacon wage requirements, which are supported by unions.

In part because of delays in complying with wage and other requirements, the GAO said, the data available from the Energy Department showed that only 9,100 homes were weatherized out of 593,000 planned.

The DOE said the report cited out-of-date figures and that since the fall, it had resolved wage and preservation issues in all 50 states and weatherized about 124,000 homes by the end of the year.

The Labor Department finished determining the prevailing wages for weatherization workers in each county of the U.S. on Sept. 3, and some states said they had waited to start weatherizing homes until the Labor Department finished setting the wages for their state.

The Labor Department said it wasn't to blame for the delays, because the DOE decided it couldn't use existing rate data for the weatherization work. That forced the Labor Department to begin a one-month survey in July to determine new rates. The Labor Department added that it issued wage guidance for states to use in the meantime.

A DOE spokeswoman said the Labor Department's data were for residential construction workers and didn't accurately reflect wages for weatherization workers, and that it needed to have the right wages to make decisions about cost-effectiveness.

Separately, the stimulus bill required that projects to upgrade Amtrak rail stations, bridges and tunnels get clearance from state historic preservation agencies. The National Historic Preservation Act of 1966 applies to all federally funded projects, and the decades-old Davis-Bacon requirements affect contractors on most federally funded construction projects.

More delays arose at agencies that had to run competitions to administer grants and contracts or negotiate with contractors over the extra transparency requirements attached to the stimulus. And Buy American rules complicated efforts, for example, by the Chicago Housing Authority to buy new security cameras because the systems it wanted weren't made in the U.S.

About $19 billion of around $180 billion appropriated for infrastructure projects has been paid out, a Wall Street Journal analysis has found. Agencies have "obligated" an additional $84 billion, announcing who will get it and working with the recipients to draw up contracts and other agreements for its use. Some agencies have moved more slowly than others in handling their stimulus money, and the lag has contributed to a lack of public confidence in whether the plan is working.

Scott Paul, executive director of the Alliance for American Manufacturing, which supported the Buy American provisions of the stimulus, called the GAO's findings "incredibly anecdotal." "We've been able to find scores of success stories around the country," he said.

Chris Braddock, director of procurement policy at the U.S. Chamber of Commerce, said he wasn't surprised by the report and that he had found the process for getting waivers for the requirements to be "hit and miss." The chamber has also criticized the Buy American Act.

Write to Louise Radnofsky at louise.radnofsky@dowjones.com and Melanie Trottman at melanie.trottman@wsj.com

Magnificent Ronald and the Founding Fathers of al Qaeda

“These gentlemen are the moral equivalents of America’s founding fathers.” — Ronald Reagan while introducing the Mujahideen leaders to media on the White house lawns (1985). During Reagan’s 8 years in power, the CIA secretly sent billions of dollars of military aid to the mujahedeen in Afghanistan in a US-supported jihad against the Soviet Union. We repeated the insanity with ISIS against Syria.